Hi tax experts. I'm trying to get our withholding right for next year (this year was a disaster that only turned out OK due to some futzing around with additional withholdings and excel). I'm having trouble because I'm getting pretty different answers from Federal (W4) and California (DE4) forms.
For Federal W4, I'm filling out the "Two Earners" section on the back. My understanding is that 401k contributions do NOT count as "Adjustments to income," right? That seems counterintuitive to me, since I'd expect the computer to determine my withholdings based on an annualization of my gross income. I did look at Publication 505, and that's what makes me think 401k contributions should not be entered anywhere on this form (but it's not explicit). If anyone can confirm that would be great. Based on this, it looks like I need to take 0 allowances, plus additional withholding (despite pretty high deductions for mortgage, state income tax, and property tax).
The California DE4 is the opposite. Again, I don't include 401k in "adjustments to income." I fill out the form using half the deductions, and still come up with a bunch of additional allowances. Alternatively, if I use all the deductions, but divide the allowances between me and my wife, it's still a high number.
Is this typical? In other words, do other people with high income and high deductions end up with 0 allowances and additional withholding? Do other people in California have this disparity between their W4 and DE2? Lets ignore any AMT issues for now... I just want to get the baseline correct.
And before anyone calls me a newb, I did in fact try Google for this information. Any help appreciated.